Obama wants to take TARP off Massad and let him regulate derivatives

If President Barack Obama has his way, Timothy Massad will no longer run the Troubled Asset Relief Program -- he instead will help make sure that another financial bailout is never again needed.

Obama announced Tuesday that Massad is his choice to succeed Gary Gensler as head of the Commodity Futures Trading Commission. The Dodd-Frank Act gave the CFTC more power to regulate derivatives, which are financial contracts based on the performance of another entity, such as assets or interest rates. Obama said these risky and complex products helped lead to the financial crisis.

The CFTC is in the process of transforming the "shadowy, secretive" derivatives market by moving large parts of it to transparent exchanges, Obama said.

The agency is succeeding even as "a swarm of financial industry lobbyists have done everything possible to thwart their every move," the president said.

Obama thanked Gensler, who has headed CFTC since the beginning of the Obama administration, for his efforts and said Massad is the right person to succeed Gensler because of his "deep commitment to the reform agenda."

As head of TARP, Massad "has played an integral role in administering one of the most successful financial emergency rescue programs ever created," said Treasury Secretary Jack Lew. "He has demonstrated a firm commitment to making taxpayers whole after the financial crisis, and thanks in no small part to his leadership, we have seen significant returns on our investment."

Obama noted that Massad, who was an attorney before joining the Obama administration, "doesn't seek the spotlight."

It's "safe to say," though, that "he never wants to manage something like TARP again."

But to be successful, financial regulatory agencies like CFTC and the Securities and Exchange Commission need more resources to do their job, Obama noted. Those resources haven't been forthcoming from Congress because "an army of lobbyists and their allies in Congress" are starving these agencies, he said.

As a result, these agencies are "undermanned, they are outgunned, and they are working overtime," Obama said.

But budget cuts, including sequestration, have prevented the CFTC from completing some of its oversight cases, the president noted.

"This is like not having enough cops on the beat, not having enough prosecutors to prosecute crimes," he said.

Business groups have fought some derivatives regulations, contending they hurt the ability of non-financial companies to hedge their risk.

Massad may not seek the spotlight, but he's going to get it, assuming he's confirmed by the Senate. The CFTC will have to fight for the right to regulate -- and to get the budget it needs to enforce its regulations.